FirstRock Real Estate Investments Limited is seeking to resuscitate its battered business as the company strategically moves to double down on the more lucrative commercial side of the real estate market.

“Right now 99 per cent of the projects that we are looking at from our pipeline are commercially based. We’re not moving out of the residential market but currently one of our targets is to outfit a portfolio of commercial investment properties to generate a particular amount of cash flow that we hope to achieve. In generating this cash flow, our aim is to yield more attractive and regular dividends for our shareholders,” said assistant vice-president of real estate business at FirstRock, Denroy Pusey during an interview with the Jamaica Observer this week.

With a number of commercial developments lined up locally, the company, Pusey said, also remains bullish on a number of other opportunities across Central America and the Caribbean.

“We remain active in Costa Rica and Jamaica at large, but we are also eyeing some developments in Turks and Caicos, Cayman and to a lesser extent, North America,” the AVP noted.

Following FirstRock’s completion of the first of two KFC restaurants in Costa Rica, Pusey said that plans are now well underway to have the second ready within another two months.

After acquiring the two parcels of land in Alajuela, San Jose, for the construction of the restaurants during the last quarter of last year, the company in less than three months commissioned the El Roble store to make way for the 55th KFC location in Costa Rica.

The developments, which are being leased under a 20-year term to Intelectiva Costa Rica SA, the operator of KFC Costa Rica, gives FirstRock access to the Latin American market, which is said to be the most profitable region for KFC worldwide. From these projects FirstRock is also looking to recoup significant returns on its investment through a strong tenant.

“We expect our returns to be in the double digit, so it’s a good look,” Pusey said.

FirstRock which at the end of its last financial year racked up a net loss of US$3.4 million and a significantly reduced property income of US$543,052, down some 92 per cent above the prior year, has become heavily focused on rebalancing its portfolio.

The company’s operation which continues to be weighted by the high interest rate environment saw earnings plummet following losses from its disposal of investment properties and unrealised fair value losses.

“High interest rates have somewhat curtailed the buoyancy in demand for real estate, which has in turn impacted values. However, the company remains confident that this negative trend will be reversed once interest rates begin to decline. The company will continue its strategy of rebalancing the portfolio by disposing of variable-income and underperforming residential and commercial properties and acquire fixed income commercial properties with strong tenants, such as the KFC acquisitions in Costa Rica. The rebalancing will see us being more heavily weighted in the Latin American region,” Chairman Norman Reid said in the year-end report to shareholders.

Pusey, in providing further update on the company’s luxurious $US13-million Hambani Estate residential project being built along Bamboo Avenue in Kingston, maintains that the development continues to attract strong demand with just about nine of the US$2 million or over $300 million in local currency priced units already sold. The remaining three units he said are only now being held with an aim to capitalise on a spike in market prices.

“We’ve already started handovers and we project to start handover for the additional units before the end of first quarter into the second quarter of this year. Despite talks, the price is not an issue as Hambani is actually one of the cheapest product on the market at a cost per square foot standpoint. We have been getting calls for the units and have already sold 75 per cent but we are literally holding off on the remaining three,” Pusey indicated.

“As real estate developers we have come to understand that we can achieve better value with a product at the backend when they are complete. We would have discounted some of the units already sold, so it is now our intention to not yet dispose of the ones we have remaining as we try to capitalise on the upside of the market price. The demand for the units remain and Century has been actively selling but we are just not looking to move any of the units until later down,” he said to the
Business Observer.

“We continue to assess the market to see where the need is as we try to push out products accordingly,” he said of the company’s outlook.

“The company is confident this rebalancing and de-risking strategy will bear fruit through the execution of development projects for sale and or lease, and acquisition of strong commercial income-producing properties throughout the Latin American and wider Caribbean region, several of which are far advanced in negotiations. These factors along with an expected improvement in the macroeconomic environment should bode well for the company and most importantly, its shareholders, in the short to medium term,” the chairman added.